SUMMARY

In compliance with Assembly Bill (AB) 1969 (Yee, 2006), Public Utilities Code (PU Code) Section 399.20, and Ordering Paragraph (OP) 1 of Decision (D.) 07-07-027, the respondents submitted Advice Letters with tariffs and standard contracts for the purchase of eligible renewable generation from public water and wastewater facilities. D.07-07-027 authorized two expansions of the tariffs. As directed in OP 2, PG&E and SCE also submitted separate tariffs for the purchase of eligible renewable generation from entities other than public water and wastewater agencies. In addition, PG&E, SCE and SDG&E were all required to offer both a full buy/sell option and an excess sale option in each tariff submitted for approval. Other respondents were only required to offer the full buy/sell option, but could choose to offer both. Under the full buy/sell option, the utility purchases all eligible renewable generation, net of station use, produced by the facility. The excess sale option allows the eligible facility to use some of the renewable energy produced to meet onsite load and sell the rest to the utility.

The rate used must be stated in each tariff or standard contract and is determined by the current Market Price Referent (MPR) table in effect on the date the contract is signed. However, the specific MPR rate within the table is based on the date of actual commercial operation. The rates are set for a period of 10, 15, or 20 years and adjusted by Time of Use (TOU)1 factors as authorized by the Commission. PU Code Section 399.20 requires that the tariffs for water and wastewater facilities be made available until the statewide cumulative rated capacity of eligible sellers reaches 250 megawatts (MW). Each utility received a proportionate share of the 250MW as the Allocation they are expected to offer service to, based on the ratio of its peak demand to the total statewide peak demand of all electrical corporations. The Commission's voluntary expansion of the tariffs to non-water and -wastewater facilities is limited to 228.447 MW statewide, representing the sum of PG&E's and SCE's original allocation. The Commission declined to extend the allocation for non-water and wastewater facilities to the other respondents, which meant that the expanded allocation is not a whole number because the two affected utilities statewide proportional share of peak demand is not a whole number. The statewide total for both sets of tariffs is 478.447 MW.

Interconnection may be accomplished using Commission-approved Rule 21, or FERC-Small Generator Interconnection Procedures (SGIP), as long as the process follows the principles of timely review and disposition, and does not present a barrier to project completion.2

The Advice Letters are approved with the following modifications:

· PG&E will amend section 2.7 of the Power Purchase Agreement (PPA) accompanying the tariff in both AL 3100-E and AL 3098-E to comply with D.07-07-027, OP 1 and 2, and to more narrowly limit participation in other California ratepayer subsidized programs related to energy production.

· SCE will amend section 6.3 of both WATER Excess Agreement and CREST Excess Agreement in AL 2148-E to limit transfer of Green Attributes to those Attributes associated with energy sold to SCE as required by D.07-07-027, OP 1 and 2.

· SCE's Subsitute Sheets for AL 2148-E will be included in the master AL 2148-E as per SCE's September 4, 2007 filing which includes the current MPR table in the tariff/PPA, as required by D.07-07-027, OP 1 and 2.

· SDG&E will amend Section 6.3 of its Public Water and Wastewater Agency Agreement (Form 160-1000) in AL 1918-E to limit the transfer of Green Attributes only to those Attributes associated with the actual sale of energy to SDG&E, as required by D.07-07-027, OP 1.

· Pacific Power will amend Appendix C: Contract Pricing, section C.3 to limit the transfer of Green Attributes to those Attributes associated with energy sold to Pacific Power, as required by D.07-07-027, OP 1.

· Both Mountain Utilities (MU) and BVES will include a table with the current MPR in the appropriate section of their filing to comply with D.07-07-027, OP 1. As indicated in D.07-07-027, this may be in the tariff, but is required in the associated PPA.

· All other Respondents will substitute the current (2007) MPR table for the 2006 MPR table currently in their ALs.

· All Respondents will change the definition of eligible electric generation facility to match the language in PU Code Section 399.20 as amended by AB 946 (Krekorian, 2007).

· All tariffs will have an effective date of February 14th, 2008 and will be available for use from that day forward.

BACKGROUND

AB 1969, approved on September 29, 2006, adds PU Code Section 399.20,

which requires all electrical corporations to file with the California Public Utilities Commission (Commission) a standard tariff to provide for payment for every kilowatthour (kWh) of renewable energy output produced at an eligible electric generation facility, as specified, at the market price determined by the Commission pursuant to PU Code Section 399.15 for a period of 10, 15 or 20 years. For purposes of PU Code Section 399.20, the electric generation facility must be an eligible renewable energy resource3 owned and operated by a public water or wastewater agency that is a retail customer of the electrical corporation, interconnected and operated in parallel with the electrical corporation's transmission and distribution system and be sized to offset part or all of the electric demand of the public agency.

On May 25, 2006, the Commission established Order Instituting Rulemaking (OIR) (R)06-05-027 to Continue Implementation and Administration of California Renewable Portfolio Standard Program. On March 12, 2007, the assigned Commissioner in R.06-05-027 issued an Amended Scoping Memo and Ruling setting forth the process to implement PU Code Section 399.20. The Amended Scoping Memo and Ruling ordered the utilities to submit draft tariffs in compliance with PU Code Section 399.20 and consider expansion of the availability of its provisions to customers who are not a public water or wastewater agency. The Utilities duly filed their proposals on or about April 11th, 2007. The proceeding ran its course, with comments, reply comments and identification of various other issues. The Commission held a workshop with all the parties on June 5th, 2007.

On July 26, 2007, the Commission adopted D.07-07-027 ordering each utility to file an advice letter to include tariff provisions implementing PU Code Section 399.20. Additionally, D.07-07-027 ordered PG&E and SCE to file tariffs to expand the purchase of renewable generation to customers who are not a public water or wastewater agency.4 The Order included a requirement that PG&E, SCE and SDG&E offer both a full buy/sell option (as interpreted by SCE and SDG&E) and an excess sales option (as interpreted by PG&E) to customers, while the other utilities are not required to offer the excess sales option, but may if they so choose. The Decision emphasizes the Commission's preference for a simple, streamlined program5, and that principle carries over to Orders in D.07-07-027 regarding: the inclusion of Rates in each tariff or standard contract; the use of the uniform statewide Market Price Referent (MPR) as the basis for those rates; the use of Standard Terms and Conditions; and exisiting Interconnection agreements.6

The tariffs must be made available until the combined statewide cumulative rated capacity of eligible generation installed in water and wastewater facilities reaches 250 MW. The Commission's expansion of the program for non-water and -wastewater facilities includes an additional 228.447 MW of capacity, for a total of 478.447 MW in the program. The selection of such an odd number is based explicitly on the primary allocations for PG&E and SCE, the only two respondents effected by the Commission's expansion. Capacity allocations may be updated as needed and appropriate. SCE, PG&E and SDG&E should provide service for projects up to 1.5 MW effective capacity, while the other respondents are only required to provide service up 1.0 MW of effective capacity. The table below shows each utility's allocated capacity in kilowatts (kW).

Table 1. Allocated Capacity per Utility

Electrical Corporation

Share of 2005 Coincident Peak Demand (%)

Water and Wastewater Capacity Allocation

(MW)

Expanded Capacity Allocation - Non-water and -wastewater

(MW)

SCE

49.538

123.844

123.844

PG&E

41.841

104.603

104.603

SDG&E

8.022

20.055

-

PacifiCorp

0.405

1.013

-

Sierra

0.162

0.404

-

BVES

0.031

0.077

-

MU

0.001

0.003

-

TOTAL

100.000

250.000

228.447

The Decision agreed with comments that timely response to interconnection requests is essential, but also agreed that adequate protocols already exist in Commission-approved Rule 21 and FERC-SGIP procedures and processes. D.07-07-027 does not specify which protocol should be used, only that the principles of orderly and timely interconnection hold in all cases. Complaints and enforcement will be considered as needed, and the matter can be reconsidered if the Commission is presented with convincing evidence of a problem or systematic pattern of abuse.

The rate that sellers will receive for their eligible renewable generation sold onto the grid will be the market price as determined by the Commission. Each year, the Commission updates the Market Price Referent (MPR) for use in 10, 15, and 20 year long term contracts for the purchase of renewable generation under its Renewable Portfolio Standard (RPS). PU Code Section 399.20(d) clearly states that the MPR will be the basis for the tariff rate in this program, and D.07-07-027 further instructs that the rate will be time differentiated, as is established practice at the Commission.7 The MPR is the predicted annual average cost of production for a baseload proxy plant. Energy produced during utility peak hours should command a higher price reflecting the higher cost of generation during those hours. Conversely, energy produced during off-peak hours is less valuable to the utility and the tariff should vary accordingly. Using Time of Delivery (TOD) adjustment factors will result in annual payments under this program that better match with the MPR.

The current MPR table and the TOD adjustment factors must be readily available in the Tariff or PPA. The date that a contract is signed or that service under one of the tariffs is requested will determine which MPR table is applicable, but the date of actual commercial operation will determine which specific MPR rate is applicable. Only BVES, Sierra Pacific and MU may use an annual average if they choose. Below is the current 2007 MPR table, adopted October 4, 2007 in Resolution E-4118.

To calculate the actual price paid for eligible renewable power under this program, the metered energy production at the point of interconnection is multiplied by the applicable MPR and then by the applicable TOD adjustment factor. So if:

At = kWh of energy distributed onto the utility grid at time "t"

B = MPR fixed at time of actual commercial operation

Ct = TOD adjustment factor for time "t"

then the price paid in $/kWh (Pt) for any given kWh produced and sold to the utility at time "t" would be calculated by the formula

At * B * Ct = Pt

Respondents filed Advice Letters in early August to establish their respective tariffs and agreements for purchase of eligible renewable generation from public water and wastewater facilities with a limited expansion to eligible renewable generation from non-water and waste-water facilities.

Table 3. Time Dependent Value for kWh Sold Under the Feed-In Tariffs ($/kWh)

Summer Weekday ($/kWh)

Winter Weekday ($/kWh)

IOU

Peak

Shoulder

Off-Peak

Peak

Shoulder

Off-Peak

PG&E

$0.18

$0.08

$0.06

$0.14

$0.10

$0.07

SCE

$0.31

$0.12

$0.06

$0.10

$0.08

$0.06

SDG&E

$0.15

$0.10

$0.08

$0.11

$0.10

$0.07

Table 3 is a representative sample of the prices available for the purchase of renewable generation under the tariffs filed by the major IOUs. These prices would be for a 15 year contract at a facility that starts operation in 2008. The fixed MPR would be $0.09383/kWh, and this would be adjusted for actual time of delivery according to the schedule in the tariff under which service was requested.

*Average daily price for constant generation or random, intermittent generation with no storage, like a wind installation.

**For sale of kWh between the hours of 8am and 6pm, or roughly the time when solar PV can be expected to provide power.

***For generation from 6pm to noon, generally listed as off-peak.

Table 4 presents some representative prices for different generation profiles. These do not represent a full analysis. Refer to the individual tariffs for more detail. In general, the kWh price offered under these tariffs varies widely from an off-peak low of $0.06/kWh to a high of $0.31/kWh in SCE's service territory for summer peak period production.

In August and September, several Interested Parties filed Protests addressing multiple concerns with the Advice Letters.

In a parallel development, AB 946 amended the definition of eligible water and wastewater facility in PU Code Section 399.20, effective January 1, 2008.

In October, the Commission approved the 2007 MPR table in Resolution E-4118, updating the 2006 MPR table used in the ALs.

This resolution modifies the Advice Letters based in part on protests and responses filed under D.07-07-027 and in part on staff reading of the Advice Letters as non-compliant with the intent of that decision and subsequent rulings and decisions relevant to these Advice Letters.

Summary of Proposed Tariffs/Standard Contracts

PG&E AL 3098-E

This AL establishes SCHEDULE E-PWF and a Section 399.20 PPA (Form 79-1102) for purchases of eligible renewable generation from Public Water and Wastewater facilities as defined in the tariff. The Allocation for this tariff is 104.603 MW of rated generation capacity. There is a full buy/sell and an excess sales option, and all Green Attributes associated with the energy sold transfer with the sale. Interconnection is accomplished through the FERC Small Generator Interconnection Procedures (SGIP). The current MPR is included in both the tariff and the PPA, and is adjusted by the Time of Delivery (TOD) Factors in Appendix C of the PPA to establish the actual Rate at which generation will be purchased.

PG&E AL 3100-E

This AL establishes SCHEDULE E-SRG and a Small Renewable Generator PPA (Form 79-1103) for purchases of renewable generation from eligible facilities as defined in the tariff. The Allocation for this tariff is 104.603 MW of rated generation capacity. There is a full buy/sell and an excess sales option, and all Green Attributes associated with the energy sold transfer with the sale. Interconnection is accomplished through the FERC Small Generator Interconnection Procedures (SGIP). The current MPR is included in both the tariff and the PPA, and is adjusted by the TOD Factors in Appendix C of the PPA to establish the actual Rate at which generation will be purchased.

SCE AL 2148-E

This AL establishes SCHEDULEWATER (for public water and wastewater facilities) and SCHEDULECREST (for other types of facilities) and associated WATER and CRESTPPAs for the purchase of renewable generation from eligible facilities as defined in each tariff. The Allocation for CREST is 123.8 MW of rated generation capacity in the SCE service territory and for WATER it is 123.9 MW. There is a full buy/sell and an excess sales option, each with its own PPA, and all Green Attributes associatedwith net generation transfer with the sale regardless of which option is taken. Interconnection is accomplished through a Commission approved process, such as Rule 21, but is not specified. The Rate is determined by the current MPR and TOD Factors which are included in the Substitute Sheets for both SCHEDULE CREST and SCHEDULE WATER submitted by SCE September 4, 2007.

Pacific Power AL 350-E

This AL establishes SCHEDULEERWW-1 for eligible Public Water Agencies as defined in the tariff for the purchase of renewable generation and a standard PPA. The Allocation for ERWW-1 is 1.013 MW of rated generation capacity in the Pacific Power service territory. The Seller may choose to be compensated for capacity and energy, or may choose to be compensated for energy only(non-firm), and all Green Attributes associatedwith net generation transfer with the sale regardless of which option is taken. Interconnection is accomplished through a Commission approved process, such as Rule 21, but is not specified. The Rate for sale of energy and capacity adjusted for TOD is presented in a table in the tariff and in Appendix C of the PPA. The Rate for sale of energy only is the applicable Off-Peak price for all net output and associated Green Attributes.

SDG&E AL 1918-E

This AL establishes SCHEDULE WATER and a PPA (Form 160-1000) for purchases of eligible renewable generation from Public Water and Wastewater facilities as defined in the tariff. The Allocation for this tariff is 20.055 MW of rated generation capacity. There is a full buy/sell and an excess sales option, and all Green Attributes associated with the Generating Facility transfer with the sale. Interconnection is accomplished through a Commission approved process, such as Rule 21, but is not specified. The current MPR is referenced but not included in either the tariff or Appendix H of the PPA, and is adjusted by the Time of Delivery (TOD) Factors in Appendix G of the PPA to establish the actual Rate at which generation will be purchased.

BVES AL 219-E

This AL establishes SCHEDULE RET and a Renewable and Alternative Power - Public Water and Wastewater Agency Agreement (PPA) (Form 27) for purchases of eligible renewable generation from Public Water and Wastewater facilities as defined in the tariff. The Allocation for this tariff is 77 kW of rated generation capacity. This is a full buy/sell tariff, and all Green Attributes associated with the Generating Facility transfer with the sale. Interconnection is accomplished through a Commission approved process, such as Rule 21, but is not specified. The current MPR is referenced but not included in either the tariff or Appendices F or G of the PPA, and is adjusted by the Time of Delivery (TOD) Factors in Appendix F of the PPA to establish the actual Rate at which generation will be purchased.

Sierra Pacific AL 331-E

This AL establishes SCHEDULE WATER for purchases of eligible renewable generation from Public Water and Wastewater facilities as defined in the tariff. The Allocation for this tariff is 404 kW of rated generation capacity. This is a full buy/sell tariff, and all Green Attributes associated with the Generating Facility transfer with the sale. Interconnection is accomplished through a Commission approved process, such as Rule 21, but is not specified. The Rate is the current MPR and is included in the tariff.

MU AL 73-E

This AL establishes SCHEDULE WATER and a Public Water and Wastewater Agency Agreement (PPA) (Form 07-100) for purchases of eligible renewable generation from Public Water and Wastewater facilities as defined in the tariff. The Allocation for this tariff is 3 kW of rated generation capacity. There is a full buy/sell and an excess sales option, and all Green Attributes associated with the Generating Facility transfer with the sale. Interconnection is accomplished through a Commission approved process, such as Rule 21, but is not specified. The current MPR is referenced but not included in either the tariff or Appendix G of the PPA, and is adjusted by the Time of Delivery (TOD) Factors in Appendix G of the PPA to establish the actual Rate at which generation will be purchased.

1 Alternatively, these are referred to as Time of Delivery (TOD) factors. In either case, this means adjusting the MPR for both the time of day (e.g. peak, off-peak, shoulder) and season (e.g. winter, summer)

4 Eligible customer generation must meet the same requirements as those applicable to water and wastewater agencies pursuant to Section 399.20.

5 See, for example, D.07-07-027 p. 7-8, "...while the proposed tariff/standard contract package requires each seller to select limited items (e.g., term of contract), the package is otherwise on a `take it or leave it' basis. We agree with this approach. The fundamental principle here is a simple, streamlined program. A potential seller can review the tariff, standard contract and rates; perform its own analysis; and make necessary decisions (e.g., contract length, whether to sign the contract). The seller does not need to incur potentially substantial time and expense in lengthy or complex negotiations."

6 Appendix A of D.07-07-027 contains a summary discussion of the major changes and inclusions required in the tariffs.